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Addition to Tax
Year Deficiency Sec. 6651(a)(1)
1997 $102,731 $25,683
1998 $ 26,347 $6,587
After concessions by the parties,2 the issue remaining for
decision is whether disability benefits received by petitioner in
1997 and 1998 from UNUM Life Insurance Co. of America (UNUM) are
excludable from his gross income pursuant to section 105(c). For
reasons set forth herein, we hold they are not.
Background
The parties submitted this case fully stipulated, without
trial, pursuant to Rule 122. The facts stipulated by the parties
are so found. The stipulation of facts and the exhibits attached
thereto are incorporated herein by this reference.
When the petition in this case was filed, petitioner resided
in Carson City, Nevada. From 1991-94, petitioner was employed as
the chief executive officer of Calera Recognition Systems
(Calera).3
In August 1991, Calera contracted for a group long-term
disability insurance policy through UNUM (the UNUM policy) for the
benefit of its employees. Under the UNUM policy, UNUM agreed to
2 Respondent concedes that petitioner is not liable for the
addition to tax under sec. 6651(a)(1). Petitioner concedes that he
failed to report properly a $14,677 State tax refund for 1995 as
income on his 1997 Federal tax return.
3 Calera ceased conducting business sometime in 2000.
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